Appleby Reports Surge In Offshore Private Equity Deals

by Lorys Charalambous, Lowtax.net, Cyprus
04 December, 2015

Private Equity (PE) activity represented over a quarter of the total value of offshore mergers and acquisitions (M&A) transactions in the third quarter of 2015, putting it on pace to generate the biggest annual dollar amount the industry has seen in the past five years, according to a report released by Appleby.

Introducing Appleby's spotlight edition of its Offshore-i report on November 30, Simon Raftopoulos, Global Group Head of Private Equity, said: "So far this year, the offshore region has witnessed 92 private equity transactions worth a combined USD56bn, and is well on its way to surpass 2014. The total sum of 2015 investments is likely to end up topping anything seen in the previous five years, with more private equity money chasing a limited supply of companies resulting in even higher valuations."

The third quarter of 2015 saw USD16.1bn in PE deals, representing over a quarter of the USD61bn of total offshore activity.

Three sectors are dominating offshore investment activity by PE firms this year, according to the report, with Information & Communication, Professional Activities, and Finance & Insurance – so-called "offshore triangle sectors" – all proving highly popular with buyout funds when they are shopping offshore.

"The largest of these three... so far this year is undoubtedly Information & Communication, which alone accounted for 12 transactions worth USD12bn," said Raftopoulos. "When combined with Finance & Insurance and Professional Services, these sectors account for almost two-thirds of deal volume in 2015 involving PE investment, and over 90 percent of the value of those deals."

Cayman Islands-incorporated companies have been the principal target of private equity investment offshore so far in 2015, with 14 deals worth an average of more than USD1bn each. In total, Cayman transactions accounted for a third of deal volume and a cumulative value of USD15bn, or nearly 75 percent of total deal value spent offshore by PE firms in the first nine months of the year.

In value terms, Bermuda was the next busiest offshore jurisdiction for PE investment, accounting for six deals worth a total of USD3.3bn, or 16 percent of all deal value. Mauritius stands out for volume, with 10 deals so far in 2015, representing nearly one in four offshore private equity transactions. These deals are small in value, worth a combined sum of just USD273m, but they highlight the growing interest of private equity firms in Africa, with Mauritius and the Seychelles the preferred offshore structuring jurisdictions for deals on that continent, the report found.

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